Lawndale's Green Bet: PACE Financing Offers Resilience with a Risky Past

LAWNDALE, CA – November 24, 2025 – In a move aimed at bolstering community resilience against rising energy costs and persistent drought, the Lawndale City Council has authorized a financing model that is both innovative and contentious. On October 6, the council voted to allow homeowners access to Property Assessed Clean Energy (PACE) financing through provider Home Run Financing (HRF), enabling residents to fund a range of critical home improvements, from solar panels and modern HVAC systems to earthquake retrofitting and wildfire hardening.

Lawndale joins a vast network of over 340 municipalities in California that have embraced PACE as a public-private solution to pressing environmental and economic challenges. For homeowners facing daunting upfront costs for green upgrades, the program appears to be a lifeline. Yet, for investors and analysts tracking long-term stability, the PACE model carries a complex history that warrants a closer look beyond the optimistic headlines.

A Tool for Modern Challenges

The appeal of PACE is straightforward and powerful. It allows property owners to finance 100% of the cost of eligible improvements and repay the amount over time through a special assessment added to their annual property tax bills. This structure eliminates the need for a large initial cash outlay, making expensive but necessary projects more accessible.

Proponents argue this is a critical tool for achieving climate goals and enhancing household financial stability. "By partnering with the private sectors through the PACE program, the City of Lawndale is giving residents – especially families with limited incomes – real options to upgrade their homes for energy efficiency, water conservation and upfront cost savings," said Councilmember Bernadette Suarez following the vote. Her statement underscores the program’s dual promise: fostering sustainable living while easing the financial burden on residents grappling with high utility bills.

Home Run Financing, the company now operating in Lawndale, reports that its projects across California have already spurred significant environmental benefits. The company claims its $630 million in financing for over 20,300 projects has led to greenhouse gas reductions equivalent to removing nearly 59,000 cars from the road for a year and has conserved 288 million gallons of water. Furthermore, HRF claims these projects have created over 5,600 jobs, positioning PACE as an engine for local economic growth.

The Fine Print on Property-Assessed Financing

Beneath the surface of these benefits lies a financial structure that has drawn considerable scrutiny. Unlike a traditional home equity loan, a PACE assessment is not a standard debt. It is a lien tied to the property itself, and crucially, it holds a senior or "super lien" priority. This means in the event of a foreclosure, the PACE assessment must be paid off before the primary mortgage.

This priority status has created significant friction within the real estate and mortgage industries. Government-sponsored enterprises like Fannie Mae and Freddie Mac have historically refused to purchase or refinance mortgages on properties with active PACE liens, creating major hurdles for homeowners looking to sell or refinance. While some workarounds have emerged, the complication remains a material risk for property owners.

Furthermore, while PACE offers accessibility, it often comes at a higher cost. Interest rates on PACE financing can be substantially higher than those for traditional home improvement loans or lines of credit. For investors evaluating the long-term health of a market, the proliferation of higher-cost debt tied to property taxes introduces a layer of systemic risk, particularly if homeowners underestimate the total cost of borrowing and the impact on their annual tax obligations.

A Legacy of Scrutiny and Reform

The history of PACE in California is a testament to these risks. In the last decade, the program has been plagued by allegations of deceptive sales tactics and predatory behavior, often targeting elderly homeowners and non-English speakers. Consumer advocacy groups have documented cases where homeowners were signed up for tens of thousands of dollars in financing without a clear understanding of the terms or the lien being placed on their property.

These concerns culminated in a dramatic move by Los Angeles County, which in May 2020 suspended its residential PACE program entirely. The county cited persistent issues with "fraud, abuse, and unaffordable loans" that continued despite earlier attempts to add consumer protections. Notably, Home Run Financing's predecessor, PACE Funding Group, was one of the administrators operating in the county at the time of the program's termination.

In response to widespread criticism, California has enacted significant reforms. The state’s Department of Financial Protection and Innovation (DFPI) now licenses and oversees PACE administrators under a stringent regulatory framework. Legislation like AB 1284 and SB 242 mandated robust ability-to-pay determinations, requiring providers to verify a homeowner's income and existing debt before approving financing. The laws also require a recorded oral confirmation of the financing terms, conducted in the homeowner's primary language, to ensure comprehension. Federal regulators are also stepping in, with a new Consumer Financial Protection Bureau (CFPB) rule set to take effect in March 2026 to further standardize disclosures and protect consumers.

Navigating a Contested Market

It is within this reformed, yet still challenging, landscape that Home Run Financing is expanding. The company, which rebranded from PACE Funding Group, is making a calculated play for resilience. Its emphasis on providing all contracts, documents, and customer service in Spanish is a direct and necessary response to past industry failures and the demographics of markets like Lawndale, where a large portion of the population is Hispanic.

This approach demonstrates a strategic understanding that long-term viability in this sector depends on rebuilding trust. However, the company's reputation remains mixed. It is not accredited by the Better Business Bureau, where its profile contains both positive feedback and sharp consumer complaints. For a company operating in a sector defined by its past controversies, rebuilding a reputation for transparency and reliability is a slow and arduous process.

The decision by Lawndale, and neighboring cities like Hawthorne and Calabasas, to partner with HRF signals a belief that the current regulatory framework is strong enough to prevent the abuses of the past. It represents a wager that the benefits of accelerated green adoption outweigh the inherent risks of the PACE model.

For investors, the PACE industry represents a fascinating case study in navigating economic and social shifts. The clear demand for climate-resilient home upgrades creates a significant market opportunity. Yet, the financial product itself carries risks that have proven damaging to both consumers and municipal programs. The resilience of a company like Home Run Financing will not be measured by its growth in a bull market, but by its ability to operate profitably and ethically under rigorous oversight, proving that it can provide stable returns without creating instability for the homeowners it serves.